Affordable housing with fair and transparent land-allocation measures is a challenge for many countries. The Sultanate of Oman solves this issue by means of land-allocation lotteries in which male and female citizens can participate in order to win a parcel of a new housing area. Besides supporting those in financial need the lottery aims to mix the separate tribes of Oman and thus contribute to the nation building of a modern society. In an earlier work, we showed that there must be severe doubts about the economic support aspect as it seems that the current lottery, without additional measures, fuels private land speculation, see Heim et al. (Homo Oecon 35:1–30, 2018). This article studies the emergent phenomenon of clan formation within the specific land-allocation system of Oman with a new mathematical and computational approach of agent-based modelling. This model is used to base the criticism to the system on scientific evidence. Both the method (clan formation exemplified as agent-based model) and findings (simulated agents and real-world behaviour) advance the discussion on how to mitigate some of the negative effects associated with the current land allocation system. To do so, we discuss the current state and criticism around this aspect of urbanisation in Oman. We study the spatial mixing of the tribes and the possibility of clan formation in modern Omani settlements in particular Muscat Capital Area. We see emergent phenomena arising from the agent-based model that matches real world behaviour leading to negative effects such as partial and incomplete land development, tribal clustering and real-estate market distortion. The agent-based model is used to discuss alternative scenarios under which tribal clan formation is used to generate a fairer and more complete settlement process in Oman to ensure the intended outcomes of Oman’s land-allocation lottery systemShow more